What Are the Differences between Pooled and Peer-to-Peer DeFi Lending Models?

Pooled lending models, like Aave or Compound, aggregate all deposited funds into a single liquidity pool, from which borrowers draw loans. Lenders earn a variable interest rate based on the pool's utilization.

Peer-to-peer (P2P) models directly match a single borrower with a single lender, where terms are often negotiated or fixed. Smart contracts manage the pool in the former and the individual agreement in the latter.

Pooled models offer greater liquidity and instant execution, while P2P offers more customized terms.